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Thursday, January 29, 2009

Tech roundup – January 29, 2009

Nintendo (NTDOY) reduced revenue forecast – surprising relative to their positioning.  Wii sales target lowered from 27.5 mil units to 26.5 mil units.  DS sales raised to 31.5 from 30.5 mil units.  The yen is the dominant factor in the lower revenue expectation.
The Skew:  Yen schmen.  Units are what matters.  First Wii estimate cut.  I’m curious how the stock takes it.

Toshiba took in more of Sandisk’s obligations in their NAND memory producing joint venture and consequently will further delay expansion.  Toshiba expects to report its first loss for the year since 2001.
The Skew:  While this provides much needed cash to Sandisk (SNDK) and reduces their ongoing lease obligations, it also will mute their leverage to an upturn and is driving them further back on the technology leadership ramp.  In an upturn, Sandisk will be forced to buy more raw NAND from external sources and will likely see lower ongoing gross margins as a result.  It also means they’re not expecting an upturn any time soon, or they’re in cash trouble.  I’m not sure which is worse.

Lehman previews Cisco (CSCO) negatively.  Revenue expectations are lowered from 9.025 to 8.85 billion.  He’s a penny below consensus on EPS.  Ffor next quarter he drops to 8.45 bil – street is 500 mil higher.  Following quarter same story – drops to 8.75 bil street at 9.3 bil.
The Skew:  Still think Cisco has to lower their long-term growth forecast and don’t think there can be any kind of bottom until they do.  Until then, I carry negative bias.  Expect numbers for street to continue to come down as quarter approaches.

Western Digital (WDC) showed good cost controls, beating revenue and EPS expectations.  They guide to 1.45 billion for next quarter, a decline of roughly 20% – in line with industry expectations of an ongoing inventory workdown and weaker OEM demand in the PC arena.  Nothing to add at this time.

Intersil (ISIL) reported a slightly better quarter, guided down another 20% and indicated demand is likely to start to improve in Q2.
The Skew:  Will do some more work on this one later.  They’ve been in freefall for a year now and I’m not current enough to know if there’s something to do here.  Interesting Q2 comment.

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